The Limitations and Illusions of Community Wealth Building

Community Wealth Building, often referred to as the ‘Preston model’, has spread to many Labour councils in England – including Birmingham. Below I briefly describe what it is doing in Birmingham. This is a short Birmingham introduction to a paper titled ‘The Limitations and Illusions of Community Wealth Building’, which offers a detailed critical analysis of the politics of Community Wealth Building in England.

There is a link to the full paper here:

The Limitations and Illusions of CWB

What is Community Wealth Building?

Community Wealth Building (CWB) is often referred to as the ‘Preston model’ because of the pioneering role of its Labour Council, in partnership with the Centre for Local Economic Strategies (CLES). CWB has become a policy of many Labour councils in England. The fundamental idea at the root of CWB is that Councils and other local public sector ‘anchor institutions’ could use their procurement of goods and services to create local ‘circular economies’ which would support local small and medium size businesses, including co-operatives, at the expense of big corporate capitalist companies. And this could spread and transform the whole economy, ending the dominance of corporate capitalism.

Community Wealth Building in Birmingham

In 2018 John McDonnell launched Labour’s Community Wealth Building Unit. In July 2018  Birmingham Council held a ‘Local Wealth Building Summit’ with its partner, CLES, and published a report: ‘Local Wealth Building in Birmingham & Beyond: A New Economic Mainstream’.

In January 2020 West Midlands Labour Party held a meeting of Labour Party activists on CWB as exemplified by Preston Council. It seemed to promise that there were progressive policies that Labour councils, even though starved of cash, could put into practice, even under the Conservative government, and that arguing for CWB could be a potent electoral strategy for Labour in Tory local authorities, offering an alternative way forward, not just mitigating measures against cuts.

Liam Byrne in his draft manifesto for WM Mayor, ‘Let’s Start Now: Our Draft Manifesto for Radical Compassion’, promises to:

  • Revolutionise community wealth-building, by tripling the size of thecooperative sector, backing green enterprise and boosting green manufacturing

  • Establish an Office for Community Wealth-Building to coordinate the public sector’s estimated £25 billion of public spending to boost social value and maximise the value of the local pound [1]

Community Wealth Building as the solution to the Covid crisis in Birmingham?

During 2020 CLES published several reports claiming that CWB was the principal solution to the damage inflicted on local economies by Covid. ‘Owning the Economy: Community Wealth Building 2020’ (3 November 2020) says:

In Birmingham, we’ve seen a whole place approach to community wealth building continue to flourish under the auspices of the Birmingham Anchor Network, with a particular focus on utilising this approach to rescue, recover and reform the local economy. (p9) [2]

CLES has been working with an Anchor Network of seven local institutions – the Council, WM Police and Crime Commissioner’s Office, Birmingham Metropolitan College, Birmingham University, Queen Elizabeth Hospital, and the Pioneer Group (Castle Vale Community Housing and Stockland Green Housing & Training) – with a CLES ‘community wealth builder in residence’ as Network Coordinator.

‘The network, which represents seven of the city’s largest institutions, a combined workforce of over 50,000 people and budget of over £5bn, has recently released an action plan which responds to the impact of Covid-19 on the Birmingham economy.’ (p8) [3]

WMPCC and Queen Elizabeth Hospital are working together with the Pioneer Group on a pilot “hospitality to health” project to deliver pre-employment courses for the NHS for at-risk workers in the hospitality sector in the socially deprived area of Castle Vale.

And ‘The Birmingham Anchor Network are now exploring mechanisms to fund and pilot a dedicated supply chain hub that can be an active “bridge” between the Network partners and Birmingham based SMEs [..] that pay the living wage, that look to maximise social impact, and in other words, have a social purpose.’ [4]

Meanwhile Birmingham City Council’s Delivery Plan, approved by Cabinet on 10 November 2020, claims that ‘We will continue to progress our work on tackling structural inequalities in the city through our work on Community Wealth Building’.

Examining the claims of Community Wealth Building

Clearly CWB in Birmingham is developing projects that are utilising the powers of local anchor institutions to create positive benefits both for local workers and unemployed people and for local SMEs in the context of Covid recovery.

But advocates of CWB repeatedly make much more ambitious claims.  It is ‘a means to initiate and institute fundamental economic change at the local level, cutting the Gordian knot of a system that puts the accumulation of private wealth and profit above the basic needs of ordinary people and community solidarity’ – or even that it can build socialism ‘from below’, gradually eroding capitalism through the spread of coops.

In my paper ‘The Limitations and Illusions of Community Wealth Building’ I examine these and other similar claims being made by advocates of CWB. Among the questions I ask are:

  • How viable is the concept of a local ‘circular economy’
  • How significant is the CWB sector of the local economy?
  • How many local jobs does CWB create?
  • Does local spending stay local?
  • Is the ‘circular economy’ argument a zero sum game?
  • Can a ‘socially just’capitalism be based on SMEs?
  • Can cooperatives spread and gradually replace capitalism?
  • Can CWB be a strategy for post-capitalist socialism?
  • To what extent can CWB be a solution to the economic crisis after Covid-19?
  • What demands does CWB place upon government?
  • Will local councils be the agents of transformative change?
  • What is the role of mass popular action in CWB?
  • What does CWB see as the role of political parties in radical change?

Click the link to the full paper at the top of this page.

Links for this Birmingham intro:

  1. https://liambyrnemp.co.uk/file/196
  2. https://cles.org.uk/wp-content/uploads/2020/10/Community-Wealth-Building-2020-final-version.pdf
  3. https://cles.org.uk/wp-content/uploads/2020/12/Growing-anchor-networks-in-place_a-how-to-guide_December-2020_final.pdf
  4. ‘Anchor Network supply chain hub: a proposal’, 11 December 2020. https://cles.org.uk/blog/anchor-network-supply-chain-hub-a-proposal/

Richard Hatcher

14 January 2021

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